Sleepy Muni Credit-Default Swap Space May Be Waking Up

When Warren Buffett's Berkshire Hathaway announced recently that it had extracted itself from a big bet insuring a massive amount of municipal debt from default, the move brought attention to a relatively sleepy part of the market.

Reflecting a lack of liquidity as much as concern about the potential for defaults, spreads in the $60 billion municipal credit-default swaps market have been wide for some time, market watchers say.